G R E E N C O AT. Greencoat UK Wind PLC. Half-yearly Report

Transcription

1 G R E E N C O AT UK WIND Greencoat UK Wind PLC Half-yearly Report six months ended 30 June 2017

2 G R E E N C O A T U K W I N D Contents Company Information 01 Summary 02 Chairman s Statement 03 Investment Manager s Report 05 Statement of Directors Responsibilities 11 Unaudited Condensed Consolidated Financial Statements 12 Notes to the Unaudited Condensed Consolidated Financial Statements 16 Defined Terms 26 Cautionary Statement 28 Company Information Directors (all non-executive) Tim Ingram (Chairman) Shonaid Jemmett-Page William Rickett C.B. Dan Badger Martin McAdam Investment Manager Greencoat Capital LLP 3rd Floor, Burdett House Buckingham Street London WC2N 6DU Administrator and Company Secretary Heritage Administration Services Limited The Innovation Centre Northern Ireland Science Park Queen s Road Belfast BT3 9DT Depositary Heritage Depositary Company (UK) Limited The Innovation Centre Northern Ireland Science Park Queen s Road Belfast BT3 9DT Registrar Capita Registrars Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TF Registered Company Number Registered Office Eastcastle Street London W1W 8DH Registered Auditor BDO LLP 55 Baker Street London W1U 7EU Legal Adviser Norton Rose Fulbright LLP 3 More London Riverside London SE1 2AQ Broker RBC Capital Markets Riverbank House 2 Swan Lane London EC4R 3BF Account Bank The Royal Bank of Scotland PLC 280 Bishopsgate London EC2M 4RB All capitalised terms are defined in the list of defined terms on pages 26 to 27 unless separately defined. 01

3 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Summary Greencoat UK Wind PLC is the leading listed renewable infrastructure fund, invested in operating UK wind farms. The Company s aim is to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio leverage. Highlights The Group s investments generated 626.6GWh of electricity, 2 per cent. above budget. Net cash generation (Group and wind farm SPVs) was 39.2 million. Acquisition of Langhope Rig and Bishopthorpe increased the portfolio to 21 wind farm investments, net generating capacity to 452MW and GAV to million as at 30 June The Company declared total dividends of pence per share with respect to the period. 175 million outstanding borrowings at 30 June 2017, equivalent to 18 per cent. of GAV. Key Metrics Market capitalisation Share price Dividends with respect to the period Dividends with respect to the period per share GAV NAV NAV per share As at 30 June million pence 23.9 million pence million million pence 02

4 G R E E N C O A T U K W I N D Chairman s Statement I am pleased to present the half-yearly report of Greencoat UK Wind PLC for the six months ended 30 June 2017, which continues to display robust performance. Performance Portfolio generation was 2 per cent. above budget at 626.6GWh. Wholesale electricity prices were slightly lower than budget, but net cash generated by the Group and wind farm SPVs amounted to 39.2 million, providing a cover of 1.7x dividends paid during the period. Full year 2017 dividend cover is expected to be lower (approximately 1.5x), owing to the standard seasonality of cashflows. Dividends and Returns The Company s aim is to provide investors with an attractive and sustainable dividend that increases in line with RPI inflation while preserving capital on a real basis. In line with our stated target of 6.49 pence per share for 2017, the Company has paid a dividend of pence per share with respect to Q and has declared a dividend of the same amount with respect to Q2 2017, giving a total of pence per share for the period (compared to 3.17 pence for the first half of 2016). NAV per share increased in the period from pence per share (ex-dividend) on 31 December 2016 to pence per share (ex-dividend) on 30 June Gearing Having raised further equity in November last year, we started the period with lower than average gearing at 11 per cent. of GAV. Following our two acquisitions in the period (see below), the Group s borrowings increased to 175 million (18 per cent. of GAV) as at 30 June 2017, of which 100 million is fixed rate term debt. The Group s policy is to have no gearing at the individual asset level, and to keep overall Group level borrowings at a prudent level (the maximum is 40 per cent. of GAV) in order to reduce risk, while ensuring that the Group is always at least fully invested thus using shareholders capital efficiently. Over the medium term we would expect gearing to be between 20 per cent. and 30 per cent.. Acquisitions During the period, the Group made two acquisitions, increasing net generating capacity to 452MW. In March, the Group acquired the 16MW Langhope Rig wind farm, situated near Hawick in the Scottish Borders, our first acquisition from GE. In June, the Group acquired the 16.4MW Bishopthorpe wind farm, situated in Lincolnshire, our fifth acquisition from BayWa. These acquisitions continue to demonstrate the Group s ability to source and execute transactions on terms that we consider to be advantageous to shareholders. Principal Risks and Uncertainties As detailed in the Company s Annual Report to 31 December 2016, the principal risks and uncertainties affecting the Group are as follows: dependence on the Investment Manager; financing risk; and risk of investment returns becoming unattractive. Also, as detailed in the Company s Annual Report to 31 December 2016, the principal risks and uncertainties affecting the investee companies are as follows: changes in government policy on renewable energy; a decline in the market price of electricity; risk of low wind resource; lower than expected life-span of the wind turbines; and health and safety and the environment. Further information in relation to these principal risks and uncertainties, which are unchanged from 31 December 2016 and remain the most likely to affect the Group in the second half of the year, may be found on pages 6 to 8 of the Company s Annual Report for the year ended 31 December Outlook Wind remains the most mature and widely deployed renewable technology available in the UK and the Company is in a good position to benefit as electricity production from wind becomes an increasingly important part of the UK s generation mix. The total market of operating wind farms in the UK (both onshore and offshore) is expected to reach 60 billion over the next few years. The supply of operating UK wind farms coming to market is increasing and the Group has a significant pipeline of opportunities. Buyer interest is also increasing, primarily reflecting the low interest rate environment. The net effect on asset prices of both increased demand and supply will be seen over the remainder of

5 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Chairman s Statement continued Outlook continued The Board considers that, for the foreseeable future, it is in the interest of our shareholders to grow the portfolio through further wind farm investments, as such growth: provides additional economies of scale at Group level; increases our market power with service providers and asset sellers; and increases liquidity in our shares. The Board does not expect any material change to its business as a result of the UK exiting the European Union or as a result of the General Election in June Since the EU referendum vote, inflation has increased. As nearly all of our cashflows are either directly or indirectly linked to RPI inflation, this is likely to have a positive effect on future cash generation. The Board remains confident of the Company s outlook for the future, and of the disciplined approach of the Investment Manager to further acquisitions and the careful management of the existing portfolio. Tim Ingram Chairman 26 July

6 G R E E N C O A T U K W I N D Investment Manager s Report Investment Portfolio The Group s investment portfolio as at 30 June 2017 consisted of interests in SPVs which hold the following underlying operating wind farms: Ownership Wind Farm Turbines Operator PPA Total MW Stake Net MW Bin Mountain GE SSE SSE % 9.0 Bishopthorpe Senvion BayWa Axpo % 16.4 Braes of Doune Vestas DNV-GL Centrica % 36.0 Carcant Siemens SSE SSE % 6.0 Clyde Siemens SSE SSE % 98.6 Cotton Farm Senvion BayWa Sainsbury s % 16.4 Drone Hill Nordex BayWa Statkraft % 14.8 Earl s Hall Farm Senvion BayWa Sainsbury s % 10.3 Kildrummy Enercon BayWa Sainsbury s % 18.4 Langhope Rig GE Natural Power Centrica % 16.0 Lindhurst Vestas Innogy Innogy % 4.4 Little Cheyne Court Nordex Innogy Innogy % 24.5 Maerdy Siemens Wind Prospect Statkraft % 24.0 Middlemoor Vestas Innogy Innogy % 26.5 North Rhins Vestas DNV-GL E.ON % 11.4 Rhyl Flats Siemens Innogy Innogy % 22.5 Screggagh Nordex Wind Prospect Energia % 20.0 Sixpenny Wood Senvion BayWa Statkraft % 10.6 Stroupster Enercon BayWa BT % 29.9 Tappaghan GE SSE SSE % 28.5 Yelvertoft Senvion BayWa Statkraft % 8.5 Total (1) (1) Numbers do not cast owing to rounding of (0.3)MW. 1 Bin Mountain 12 Little Cheyne Court 19 2 Bishopthorpe 13 Maerdy 3 Braes of Doune 14 Middlemoor 4 Carcant 15 North Rhins 9 5 Clyde 16 Rhyl Flats 3 6 Cotton Farm 7 Drone Hill 17 Screggagh 18 Sixpenny Wood Earl s Hall Farm 9 Kildrummy 10 Langhope Rig 11 Lindhurst 19 Stroupster 20 Tappaghan 21 Yelvertoft

7 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Investment Manager s Report continued Investment Portfolio continued The portfolio breakdown by value as at 30 June 2017 is as follows: Onshore/Offshore Geography Onshore Offshore Scotland Northern Ireland England Wales Asset Age Turbine Manufacturer < 5 years 5-10 years > 10 years Vestas Siemens Senvion Nordex Enercon GE Assets Clyde Stroupster Middlemoor Braes of Doune Rhyl Flats Kildrummy Maerdy Bishopthorpe Cotton Farm Langhope Rig Other Portfolio Performance Portfolio generation for the six months ended 30 June 2017 was 626.6GWh (1), 2 per cent. above budget. Overall portfolio availability was in line with budget. Notable issues were: lower than budgeted availability at Little Cheyne Court due to various gearbox, converter and blade bolt failures; lower than budgeted availability at Earl s Hall Farm due to scheduled and unscheduled grid outages; and successful remediation by Siemens of Maerdy yaw gear issues at all but one turbine location compensation has been agreed in relation to the remaining turbine, which will be curtailed at high wind speeds. The Vestas warranty, operation and maintenance contract at Braes of Doune was renewed for a further 10 years (to August 2027) to include a wider scope and at lower cost. Optimisation packages were installed (at the cost of the turbine manufacturer) at various sites, ranging from the installation of blade serrations to software upgrades. Potential generation gains will be monitored over the course of the year. The Stroupster wind energy true-up was agreed in the period and BayWa will make a payment to the Group of 2.6 million on 31 July The Stroupster load factor assumption has been reduced accordingly. (1) Including Clyde curtailed generation. 06

8 G R E E N C O A T U K W I N D Investment Manager s Report continued Health and Safety There were no major incidents in the six months ended 30 June Acquisitions On 24 March 2017, the Group invested 39.9 million (including acquisition costs, excluding acquired cash) to acquire 100 per cent. of the 16MW Langhope Rig wind farm from GE. The transaction was negotiated on a bilateral basis and executed efficiently for the benefit of both the Group and GE. On 30 June 2017, the Group invested 47.8 million (including acquisition costs, excluding acquired cash) to acquire 100 per cent. of the 16.4MW Bishopthorpe wind farm from BayWa. Bishopthorpe is the fifth wind farm that the Group has bought from BayWa and follows on from Cotton Farm and Earl s Hall Farm (2013), Kildrummy (2014) and Stroupster (2015). Including Bishopthorpe, BayWa now operates eight wind farms in the Group s portfolio. Financial Performance six months ended 30 June 2017 Group and wind farm SPV cash flows m Net cash generation 39.2 Dividends paid (23.6) Acquisitions (86.8) Acquisition costs (0.2) Equity issuance Equity issuance costs (0.2) Debt drawdown 75.0 Upfront finance costs Movement in cash (Group and wind farm SPVs) 3.4 Opening cash balance (Group and wind farm SPVs) 20.7 Ending cash balance (Group and wind farm SPVs) 24.1 Net cash generation 39.2 Dividends 23.6 Dividend cover 1.7x 07

9 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Investment Manager s Report continued Investment Performance The NAV at 30 June 2017 was million (109.8 pence per share). Opening NAV 31 Dec 2016 Investment in new assets Movement in DCF valuation Movement in cash (Group and wind farm SPVs) Movement in other relevant assets/liabilities Movement in Aggregate Group Debt Closing NAV 30 Jun m 87.6m ( 8.0)m 3.4m 1.5m ( 75.0)m 809.7m (1) 1, m Shares in issue 736,700, ,319,408 NAV/share (pence) (1) Numbers do not cast owing to a rounding of 0.1m. A dividend of 11.7 million (1.585 pence per share) was paid in February 2017 with respect to the three month period ended 31 December 2016 and a dividend of 12.0 million ( pence per share) was paid in May 2017 with respect to the three month period ended 31 March A dividend of 12.0 million ( pence per share) will be paid on 25 August 2017 with respect to the three month period ended 30 June pence per share NAV at 31 December Less February 2017 dividend (1.6) NAV at 31 December 2016 (ex dividend) NAV at 30 June Less August 2017 dividend (1.6) NAV at 30 June 2017 (ex dividend) Movement in NAV (ex dividend)

10 G R E E N C O A T U K W I N D Investment Manager s Report continued Investment Performance continued The chart below shows NAV per share versus RPI. NAV vs RPI Jun 2013 Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 NAV (pence per share) (ex dividend) RPI The share price as at 30 June 2017 was pence, representing a 10.4 per cent. premium to NAV. The chart below shows TSR versus market peers. Total Shareholder Return vs Market Peers (Bloomberg) Pence Jun 2013 Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Greencoat UK Wind Foresight Solar Fund Bluefield Solar Income Fund John Laing Environmental Assets Group The Renewables Infrastructure Group Next Energy Solar Fund 09

11 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Investment Manager s Report continued Reconciliation of Statutory Net Assets to Reported NAV As at As at 30 June December DCF valuation 959, ,913 Cash (wind farm SPVs) 21,329 14,878 Fair value of investments 980, ,791 Cash (Group) 2,801 5,860 Other relevant assets/(liabilities) 1,031 (513) GAV 984, ,138 Aggregate Group Debt (175,000) (100,000) NAV 809, ,138 Reconciling items Statutory net assets 809, ,138 Shares in issue 737,319, ,700,850 NAV per share (pence) Gearing As at 30 June 2017, the Group had 175 million of debt outstanding, equating to 18 per cent. of GAV. 175 million outstanding debt comprised a term debt facility of 100 million together with associated interest rate swaps and 75 million drawn under the Group s revolving credit facility. Outlook The regulatory outlook for operational wind farms in the UK remains stable owing to the UK Government s policy of grandfathering for operational projects. The Group invests in operational wind farms, backed by known and fixed support mechanisms. There is currently 11GW of operational onshore wind capacity plus 5GW offshore. Installed capacity is set to grow over the next few years to 12GW onshore plus 12GW offshore, as assets in construction come into operation. In monetary terms, the secondary market for operational UK wind farms is approximately 37 billion, increasing to 60 billion in the medium term. The Group currently has a market share of approximately 3 per cent.. The Company does not expect any material change to its business as a result of the UK exiting the European Union. Being solely UK focused and deliberately low-risk, all of the Group s assets and liabilities are inside the UK and sterling denominated. In addition, the regulatory regime under which the assets operate is robust, longstanding and rooted in UK legislation. As an owner of operational wind farms, the key risk faced by the Group is power price. Power prices in the period were below budget, with prices falling from Q levels. In general, independent forecasters expect UK wholesale power prices to rise in real terms from current levels, driven by higher gas and carbon prices. The long term power price forecast is updated each quarter and reflected in the reported NAV. In general, the outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio combined with a healthy pipeline of attractive further investment opportunities. There are a number of new buyers in the market, reflecting the attractiveness of the asset class; on the other hand, there are more assets coming to market and the Group is engaged in more active opportunities than at any time. The net effect on asset prices of both increased demand and supply will be seen over the remainder of

12 G R E E N C O A T U K W I N D Statement of Directors Responsibilities The Directors acknowledge responsibility for the interim results and approve this half-yearly report. The Directors confirm that to the best of their knowledge: a) the condensed financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and give a true and fair view of the assets, liabilities and financial position and the profit of the Group as required by DTR 4.2.4R; b) the interim management report, included within the Chairman s Statement and Investment Manager s Report, includes a fair review of the information required by DTR 4.2.7R, being the significant events of the first half of the year and the principal risks and uncertainties for the remaining six months of the year; and c) the condensed financial statements include a fair review of the related party transactions, as required by DTR 4.2.8R. The Responsibility Statement has been approved by the Board. Tim Ingram Chairman 26 July

13 Greencoat UK Wind PLC Half-yearly Report Condensed Consolidated Statement of Comprehensive Income (unaudited) six months ended 30 June 2017 six months ended six months ended 30 June June 2016 Note Return on investments 3 40,617 26,838 Other income Total income and gains 40,903 27,062 Operating expenses 4 (5,244) (3,959) Investment acquisition costs (551) (2,562) Operating profit 35,108 20,541 Finance expense 12 (2,705) (3,903) Profit for the period before tax 32,403 16,638 Tax credit Profit for the period after tax 32,579 16,982 Profit and total comprehensive income attributable to: Equity holders of the Company 32,579 16,982 Earnings per share Basic and diluted earnings from continuing operations in the period (pence) The accompanying notes on pages 16 to 25 form an integral part of the financial statements. 12

14 G R E E N C O A T U K W I N D Condensed Consolidated Statement of Financial Position (unaudited) As at 30 June June December 2016 Note Non current assets Investments at fair value through profit or loss 8 980, , , ,791 Current assets Receivables 10 3,030 3,838 Cash and cash equivalents 2,801 5,860 5,831 9,698 Current liabilities Payables 11 (1,999) (4,351) Net current assets 3,832 5,347 Non current liabilities Loans and borrowings 12 (175,000) (100,000) Net assets 809, ,138 Capital and reserves Called up share capital 14 7,373 7,367 Share premium account , ,110 Other distributable reserves 133, ,011 Retained earnings 173, ,650 Total shareholders funds 809, ,138 Net assets per share (pence) Authorised for issue by the Board on 26 July 2017 and signed on its behalf by: Tim Ingram Chairman Shonaid Jemmett-Page Director The accompanying notes on pages 16 to 25 form an integral part of the financial statements. 13

15 Greencoat UK Wind PLC Half-yearly Report Condensed Consolidated Statement of Changes in Equity (unaudited) six months ended 30 June 2017 Other Share Share distributable Retained six months ended capital premium reserves earnings Total 30 June 2017 Note Opening net assets attributable to shareholders (1 January 2017) 7, , , , ,138 Issue of share capital Share issue costs 14 (24) (24) Profit and total comprehensive income for the period 32,579 32,579 Interim dividends paid in the period 7 (23,645) (23,645) Closing net assets attributable to shareholders 7, , , , ,734 The total reserves distributable by way of a dividend as at 30 June 2017 were 264,061,571. Other Share Share distributable Retained six months ended capital premium reserves earnings Total 30 June Opening net assets attributable to shareholders (1 January 2016) 5, , ,096 79, ,766 Issue of share capital , ,520 Share issue costs (1,902) (1,902) Profit and total comprehensive income for the period 16,982 16,982 Interim dividends paid in the period (15,972) (15,972) Closing net assets attributable to shareholders 6, , ,124 96, ,394 The total reserves distributable by way of a dividend as at 30 June 2016 were 263,098,988. The accompanying notes on pages 16 to 25 form an integral part of the financial statements. 14

16 G R E E N C O A T U K W I N D Condensed Consolidated Statement of Cash Flows (unaudited) six months ended 30 June 2017 six months ended six months ended 30 June June 2016 Note Net cash flows from operating activities 16 26,917 31,407 Cash flows from investing activities Acquisition of investments (86,900) (219,373) Investment acquisition costs (158) (2,520) Cash received for adjustment to purchase price of investments 3,200 Repayment of shareholder loan investment 8 8,404 Net cash flows from investing activities (78,654) (218,693) Cash flows from financing activities Issue of share capital 100,000 Payment of issue costs (198) (1,736) Amounts drawn down on loan facilities 12 75, ,000 Amounts repaid on loan facilities (100,000) Finance costs (2,479) (4,094) Dividends paid 7 (23,645) (15,972) Net cash flows from financing activities 48, ,198 Net (decrease)/increase in cash and cash equivalents during the period (3,059) 912 Cash and cash equivalents at the beginning of the period 5,860 7,231 Cash and cash equivalents at the end of the period 2,801 8,143 The accompanying notes on pages 16 to 25 form an integral part of the financial statements. 15

17 Greencoat UK Wind PLC Half-yearly Report Notes to the Unaudited Condensed Consolidated Financial Statements six months ended 30 June Significant accounting policies Basis of accounting The condensed consolidated financial statements included in this half-yearly report have been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the preparation of the Group s consolidated annual financial statements for the year ended 31 December 2016 and is expected to continue to apply in the Group s consolidated financial statements for the year ended 31 December The Group s consolidated annual financial statements were prepared on the historic cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss, and in accordance with IFRS to the extent that they have been adopted by the EU and with those parts of the Companies Act 2006 applicable to companies under IFRS. These condensed financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group s consolidated annual financial statements as of 31 December The audited annual accounts for the year ended 31 December 2016 have been delivered to the Registrar of Companies. The audit report thereon was unmodified. Review This half-yearly report has not been audited or reviewed by the Company s Auditor in accordance with the International Standards on Auditing (ISAs) (UK) or International Standard on Review Engagements (ISREs). Going concern After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements. Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Group s performance and to allocate resources is the total return on the Group s net assets, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements. For management purposes, the Group is organised into one main operating segment, which invests in wind farm assets. All of the Group s income is generated within the UK. All of the Group s non-current assets are located in the UK. Seasonal and cyclical variations The Group s results do not vary significantly during reporting periods as a result of seasonal activity. 16

18 2. Investment management fees Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a combination of a Cash Fee and an Equity Element from the Company. The Cash Fee and Equity Element are calculated quarterly in advance, as disclosed on page 51 of the Company s Annual Report for the year ended 31 December Investment management fees paid or accrued in the period were as follows: Total amounts paid Value of Equity to the Investment Cash Fee Element Manager six months ended 30 June Quarter to March , ,250 Quarter to June , ,273 Total 3, ,523 As at 30 June 2017, total amounts payable to the Investment Manager were nil (31 December 2016: 340,459). Total amounts paid to the Investment Manager for the six months ended 30 June 2016 were 3,135, Return on investments G R E E N C O A T U K W I N D Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June 2017 six months ended six months ended 30 June June Dividends received (note 17) 29,145 32,723 Interest on shareholder loan investment received (note 17) 1,534 1,874 Gain on adjustment to purchase price of investment (notes 8 & 13) 2,600 1,200 Unrealised movement in fair value of investments (note 8) 7,338 (8,959) 40,617 26, Operating expenses six months ended six months ended 30 June June Management fees (note 2) 4,523 3,135 Group and SPV administration fees Non-executive Directors fees Other expenses Fees to the Company s Auditor: for audit of the statutory financial statements for other audit related services 4 4 5,244 3,959 The fees to the Company s auditor includes 3,700 (30 June 2016: 3,600) payable in relation to a limited review of the half-yearly report and estimated accruals proportioned across the year for the audit of the statutory financial statements. 17

19 Greencoat UK Wind PLC Half-yearly Report Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Taxation Taxable income during the period was offset by management expenses and the tax charge for the period ended 30 June 2017 is nil (30 June 2016: nil). The Group has tax losses carried forward available to offset against current and future profits as at 30 June 2017 of 7,654,199 (30 June 2016: 7,636,756). During the period, 176,000 (30 June 2016: 344,000) was received from Little Cheyne Court as compensation for corporation tax losses surrendered by way of consortium relief in relation to the year ended 31 December Earnings per share six months ended six months ended 30 June June 2016 Profit attributable to equity holders of the Company ,579 16,982 Weighted average number of ordinary shares in issue 737,055, ,969,070 Basic and diluted earnings from continuing operations in the period (pence) Dilution of the earnings per share as a result of the Equity Element of the investment management fee as disclosed in note 2 does not have a significant impact on the basic earnings per share. 7. Dividends declared with respect to the period Dividend per share Total dividend Interim dividends paid during the period ended 30 June 2017 pence 000 With respect to the quarter ended 31 December ,682 With respect to the quarter ended 31 March , ,645 Dividend per share Total dividend Interim dividends declared after 30 June 2017 and not accrued in the period pence 000 With respect to the quarter ended 30 June , ,968 As disclosed in note 18, on 26 July 2017, the Board approved a dividend of pence per share in relation to the quarter ended 30 June 2017, bringing the total dividends declared with respect to the period to pence per share. The record date for the dividend is 11 August 2017 and the payment date is 25 August

20 G R E E N C O A T U K W I N D Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Investments at fair value through profit or loss Loans Equity interest Total period ended 30 June Opening balance 107, , ,791 Additions 87,177 87,177 Repayment of shareholder loan investment (note 17) (8,404) (8,404) Adjustment to purchase price of investment (note 13) (2,600) (2,600) Gain on adjustment to purchase price of investment (note 3) 2,600 2,600 Unrealised movement in fair value of investments (note 3) 1,450 5,888 7, , , ,902 Loans Equity interest Total period ended 30 June Opening balance 657, ,591 Additions 113, , ,917 Adjustment to purchase price of investments (1,200) (1,200) Gain on adjustment to purchase price of investment (note 3) 1,200 1,200 Unrealised movement in fair value of investments (note 3) 18 (8,977) (8,959) 113, , ,549 The unrealised movement in fair value of investments of the Group during the period was made up as follows: six months ended six months ended 30 June June Decrease in DCF valuation of investments (7,977) (14,551) Repayment of shareholder loan investment (note 17) 8,404 Movement in cash balances of SPVs 6,374 3,030 Acquisition costs 537 2,562 7,338 (8,959) Fair value measurements As disclosed on page 56 of the Company s Annual Report for the year ended 31 December 2016, IFRS 13 Fair Value Measurement requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities ranges from level 1 to level 3 and is determined on the basis of the lowest level input that is significant to the fair value measurement. The fair value of the Group s investments is ultimately determined by the underlying fair values of the SPV investments. Due to their nature, they are always expected to be classified as level 3 as the investments are not traded and contain unobservable inputs. There have been no transfers between levels during the six months ended 30 June

21 Greencoat UK Wind PLC Half-yearly Report Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Investments at fair value through profit or loss continued Sensitivity analysis The fair value of the Group s investments is 980,901,848 (31 December 2016: 894,790,604). The analysis below is provided in order to illustrate the sensitivity of the fair value of investments to an individual input, while all other variables remain constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to imply the likelihood of change or that possible changes in value would be restricted to this range. Change in fair value Change in NAV Change in of investments per share Input Base case input 000 pence Discount rate 8 9 per cent per cent. (32,643) (4.4) per cent. 34, Energy yield P50 10 year P90 (57,510) (7.8) 10 year P10 57, Power price Forecast by - 10 per cent. (65,868) (8.9) leading consultant + 10 per cent. 65, Long term inflation rate 2.75 per cent per cent. (35,162) (4.8) per cent. 37, The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented. The base case asset life assumption is 25 years from commissioning. An asset life sensitivity is not presented owing to the difficulty in quantifying various associated valuation drivers, including: ability to extend the lease term; ability to extend planning permission; commercial terms attaching to any lease extension; operating and maintenance costs associated with longer life; decommissioning costs; and scrap value. Notwithstanding the difficulty in quantification, the Investment Manager considers asset life extension to be a significant potential upside to the Group. Asset life is also highlighted as a principal risk and uncertainty on page 8 of the Company s Annual Report for the year ended 31 December Unconsolidated subsidiaries, associates and joint ventures The following table shows subsidiaries of the Group. As the Company is regarded as an investment entity under IFRS, these subsidiaries have not been consolidated in the preparation of the financial statements: Ownership Interest Investment Place of Business as at 30 June 2017 Bin Mountain Northern Ireland 100% Bishopthorpe England 100% Carcant Scotland 100% Cotton Farm England 100% Earl s Hall Farm England 100% Kildrummy Scotland 100% Langhope Rig Scotland 100% Maerdy Wales 100% Screggagh Northern Ireland 100% Stroupster Scotland 100% Tappaghan Northern Ireland 100% Drone Hill Scotland 51.6% North Rhins Scotland 51.6% Sixpenny Wood England 51.6% Yelvertoft England 51.6% SYND Holdco* UK 51.6% * The Group s investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco. 20

22 G R E E N C O A T U K W I N D Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Unconsolidated subsidiaries, associates and joint ventures continued The following table shows associates and joint ventures of the Group which have been recognised at fair value as permitted by IAS 28 Investments in Associates and Joint Ventures : Ownership Interest Investment Place of Business as at 30 June 2017 Braes of Doune Scotland 50% ML Wind* England 49% Little Cheyne Court England 41% Clyde Scotland 28.2% Rhyl Flats Wales 24.95% * The Group s investments in Middlemoor and Lindhurst are 49 per cent. (31 December 2016: 49 per cent.). These are held through ML Wind. As disclosed in note 17, Holdco has provided a loan to Clyde which accrues interest at a rate of 5.8 per cent. per annum. Security deposits and guarantees provided during the period by the Group on behalf of its investments are as follows: Amount Provider of security Investment Beneficiary Nature Purpose 000 The Company Langhope Rig Barclays Counter-indemnity Decommissioning The fair value of counter-indemnities provided by the Group are considered to be nil. There were no other changes to security deposits and guarantees as disclosed on page 59 of the Company s Annual Report for the year ended 31 December Receivables 30 June December Amounts due in relation to wind energy true-up (notes 8 & 13) 2,600 VAT receivable 300 2,854 Prepayments Other receivables 43 8 Amounts due as consideration for investee company tax losses (note 17) 897 3,030 3,838 21

23 Greencoat UK Wind PLC Half-yearly Report Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Payables 30 June December Loan interest payable Commitment fee payable Acquisition costs payable 393 Deferred consideration (note 18) 277 Other payables VAT payable 2,647 Investment management fee payable 340 Share issue costs payable 180 1,999 4, Loans and borrowings 30 June December Opening balance 100, ,000 Revolving credit facility Drawdowns 75, ,000 Repayments (245,000) Term debt facility Drawdowns 25,000 Closing balance 175, ,000 six months ended six months ended 30 June June Loan interest 1,929 3,209 Commitment fees Other facility fees Facility arrangement fees 275 Professional fees 22 Finance expense 2,705 3,903 The loan balances as at 30 June 2017 have not been revalued to reflect amortised cost, as the amounts are not materially different from the outstanding balances. There are no changes to the terms of the revolving credit facility or the term debt facility as disclosed on page 61 of the Company s Annual Report for the year ended 31 December As at 30 June 2017, accrued interest on the revolving credit facility was 165,572 (31 December 2016: nil) and the outstanding commitment fee was 233,627 (31 December 2016: 193,027). As at 30 June 2017, accrued interest on the term debt facility and associated swap was 588,964 (31 December 2016: 570,266). 22

24 G R E E N C O A T U K W I N D Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Contingencies On 17 May 2017, the Stroupster wind energy true-up was agreed and BayWa will make a payment to the Group of 2,600,000 on 31 July The Stroupster load factor assumption has been reduced accordingly. The wind-energy true-up for Clyde Extension remains outstanding and the maximum adjustment under this mechanism is 4,747, Share capital ordinary shares of 0.01 Share Share Number of capital premium Total Date Issued and fully paid shares issued January ,700,850 7, , ,477 Shares issued to the Investment Manager 2 February 2017 True-up of 2016 Equity Element 21, February 2017 Q Equity Element 299, May 2017 Q Equity Element 298, , Other 1 January 2017 Less share issue costs* (24) (24) 30 June ,319,408 7, , ,139 * Share issue costs recognised in the period in relation to the capital raise on 22 November Net assets per share 30 June December 2016 Net assets , ,138 Number of ordinary shares issued 737,319, ,700,850 Total net assets pence Reconciliation of operating profit for the period to net cash from operating activities six months ended six months ended 30 June June Operating profit for the period 35,108 20,541 Adjustments for: Movement in fair value of investments (notes 3 & 8) (7,338) 8,959 Adjustment to purchase price of investment (notes 8 & 13) (2,600) (1,200) Investment acquisition costs 551 2,562 Decrease/(increase) in receivables 2,505 (347) Decrease in payables (3,034) (1,189) Equity Element of Investment Manager s fee Consideration for investee company tax losses 1,073 1,561 Net cash flows from operating activities 26,917 31,407 23

25 Greencoat UK Wind PLC Half-yearly Report Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Related party transactions On 24 March 2017, the Company increased its loan to Holdco by 37,000,000 relating to the acquisition of Langhope Rig and on 29 June 2017, the Company increased its loan to Holdco by 38,000,000 relating to the acquisition of Bishopthorpe. During the period, Holdco repaid 35,746,585 of the loan and the amount outstanding at the period end was 285,787,790 (31 December 2016: 246,534,375). Holdco has provided a loan to Clyde which accrues interest at a rate of 5.8 per cent. per annum. During the period, the Group received loan capital repayments of 8,403,600 (30 June 2016: nil) and loan interest repayments of 1,533,723 (30 June 2016: 1,873,729) during the period from Clyde in relation to this shareholder loan. The balance of the loan receivable from Clyde at 30 June 2017 was 99,252,264 (31 December 2016: 107,655,864) and interest receivable at 30 June 2017 was 1,466,618 (31 December 2016: 17,107). During the period, 176,000 (30 June 2016: 602,937) was received from Little Cheyne Court and 897,321 (30 June 2016: 958,392) was received from Braes of Doune, as compensation for corporation tax losses surrendered by way of consortium relief by the Group. The below table shows dividends received in the period from the Group s investments. six months ended six months ended 30 June June SYND Holdco (1) 3,792 4,132 Stroupster 3,717 3,947 Rhyl Flats 2,994 2,779 ML Wind (2) 2,764 2,538 Braes of Doune 2,214 2,465 Tappaghan 2,052 2,576 Kildrummy 2,013 2,863 Little Cheyne Court 1,960 1,952 Maerdy 1,930 3,093 Cotton Farm 1,725 2,682 Screggagh 1,500 Earl s Hall Farm 920 1,978 Bin Mountain 757 1,008 Carcant Langhope Rig ,145 32,723 (1) The Group s investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco. (2) The Group s investments in Middlemoor and Lindhurst are held through ML Wind. 24

26 G R E E N C O A T U K W I N D Notes to the Unaudited Condensed Consolidated Financial Statements continued six months ended 30 June Subsequent events Group payables as at 30 June 2017 include 277,000 deferred consideration payable to the sellers of Bishopthorpe which comprises a working capital balance that was agreed on 20 July 2017 and settled on24july On 26 July 2017, the Board approved a dividend of 11,967,845, equivalent to pence per share. The record date for the dividend is 11 August 2017 and the payment date is 25 August

27 Greencoat UK Wind PLC Half-yearly Report Defined Terms BDO LLP means the Company s Auditor as at the reporting date Bin Mountain means Bin Mountain Wind Farm (NI) Limited Bishopthorpe means Bishopthorpe Wind Farm Limited Board means the Directors of the Company Braes of Doune means Braes of Doune Wind Farm (Scotland) Limited Carcant means Carcant Wind Farm (Scotland) Limited Cash Fee means the cash fee that the Investment Manager is entitled to under the Investment Management Agreement Clyde means Clyde Wind Farm (Scotland) Limited Clyde Extension means the Clyde extension wind farm currently being developed by SSE adjacent to the operational Clyde wind farm Company means Greencoat UK Wind PLC Cotton Farm means Cotton Farm Wind Farm Limited DCF means Discounted Cash Flow Drone Hill means Drone Hill Wind Farm Limited DTR means the Disclosure Guidance and Transparency Rules sourcebook issued by the Financial Conduct Authority Earl s Hall Farm means Earl s Hall Farm Wind Farm Limited Equity Element means the ordinary shares issued to the Investment Manager under the Investment Management Agreement EU means the European Union GAV means Gross Asset Value as defined in the prospectus Group means Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited Holdco means Greencoat UK Wind Holdco Limited IAS means International Accounting Standard IFRS means International Financial Reporting Standards Investment Management Agreement means the agreement between the Company and the Investment Manager Investment Manager means Greencoat Capital LLP Kildrummy means Kildrummy Wind Farm Limited Langhope Rig means Langhope Rig Wind Farm Limited Lindhurst means Lindhurst Wind Farm Little Cheyne Court means Little Cheyne Court Wind Farm Limited Maerdy means Maerdy Wind Farm Limited Middlemoor means Middlemoor Wind Farm ML Wind means ML Wind LLP NAV means Net Asset Value as defined in the prospectus NAV per Share means the Net Asset Value per Ordinary Share North Rhins means North Rhins Wind Farm Limited PPA means Power Purchase Agreement entered into by the Group s wind farms RBC means the Royal Bank of Canada Review Section means the front end review section of this report (including but not limited to the Chairman s Statement and the Investment Manager s Report) Rhyl Flats means Rhyl Flats Wind Farm Limited RPI means the Retail Price Index Screggagh means Screggagh Wind Farm Limited Sixpenny Wood means Sixpenny Wood Wind Farm Limited SPVs means the Special Purpose Vehicles which hold the Group s investment portfolio of underlying operating wind farms Stroupster means Stroupster Caithness Wind Farm (Scotland) Limited 26

28 G R E E N C O A T U K W I N D Defined Terms continued SYND Holdco means SYND Holdco Limited Tappaghan means Tappaghan Wind Farm (NI) Limited TSR means Total Shareholder Return UK means the United Kingdom of Great Britain and Northern Ireland Yelvertoft means Yelvertoft Wind Farm Limited 27

29 Greencoat UK Wind PLC Half-yearly Report for the six months ended 30 June 2017 Cautionary Statement The Review Section of this report has been prepared solely to provide additional information to shareholders to assess the Company s strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose. The Review Section may include statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, intends, may, will or should or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors and the Investment Manager concerning, amongst other things, the investment objectives and investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company and the markets in which it invests. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company s actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document. Subject to their legal and regulatory obligations, the Directors and the Investment Manager expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. In addition, the Review Section may include target figures for future financial periods. Any such figures are targets only and are not forecasts. This half-yearly report has been prepared for the Company as a whole and therefore gives greater emphasis to those matters which are significant in respect of Greencoat UK Wind PLC and its subsidiary undertakings when viewed as a whole. 28

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